U.S. Markets closed

Shake Shack: The Surprise Loser From Winter Storm Stella?

Joseph Lu

A blizzard is bringing more than a foot of snow to much of the Northeast on Tuesday, and while grocery chains like Wal-Mart WMT and Costco COST could benefit from the storm as people rush to stock up on supplies, restaurant chains will likely lose out on a day or two of business.

The two chains that are looking to be impacted the most are Dunkin’ Brands DNKN and Shake Shack SHAK, as 71% of Dunkin’s business and 70% of Shake Shack’s is in the Northeast, according to Maxim analyst Stephen Anderson.

Anderson estimates that the storm could take off as much as 1% from those chains’ first quarter same-restaurant sales.

Not exactly the news that Shake Shack would want to hear, especially after a troubling fourth quarter earnings report. Shake Shack reported a same-restaurant sales increase of 1.6%, missing their forecast of 2.9% for the quarter. (For more information on Shake Shack’s Q4 earnings, check out this Zacks Article: Shake Shack Down on Weak Same-Store Sales, Earnings In-Line)

Luckily for the restaurants, Anderson doesn’t expect the impact to be long-term. He also sees potential for restaurants to gain back the sales if there are widespread power failures associated with this storm, which will presumably force people back to the restaurants.

Shake Shack and Dunkin’ aren’t the only ones who could lose sales. Chipotle Mexican Grill CMG has 24% of its business in the Northeast, while Panera PNRA has 28%.

Shares of Shake Shack have dropped 1.38% to $30.72 at close, CMG is down 0.68% at $403.10, Panera is down just 0.1% at $234.27, while Dunkin’ is up 0.18% at $54.25.

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Wal-Mart Stores, Inc. (WMT): Free Stock Analysis Report
 
Costco Wholesale Corporation (COST): Free Stock Analysis Report
 
Panera Bread Company (PNRA): Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report
 
Shake Shack, Inc. (SHAK): Free Stock Analysis Report
 
Dunkin' Brands Group, Inc. (DNKN): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research